Liquidity

Blockchain technology can help banks cut costs by up to $12bn annually in back-office processes such as settlement, regulatory and cross-border payment costs. Established players in financial technology space are acknowledging the possibility and importance of the blockchain for asset management, crypto investment, and tokenization. Consortiums of large banks, central banks, regulators as well as FinTechs, are engaged in the development of blockchain technology to leverage the distributed ledger technology.

Blockchain platforms can be classified as public, private and federated. To distinguish the type is to check for permission (public or private), permissionless and restricted permissions. The blockchain platform consists of a smart contract model with roles like Contract Owner, Team Member, Advisor, Holder and interfaces to Asset Proxies, Exchanges, BMC Token and Asset Tokens. The contract has the deposit wallets’ logic based on Asset Proxies. An Asset Proxy is an ECR20-compatible contract. It implements an interface between the platform Wallet with income, and external addresses such as exchanges. Tokens are implemented as token-as-a-currency instruments and receive proceeds from continuous contributors. The tokens are connected to the platform via the platform asset and proxy asset interfaces. The smart contract for asset token is made up of specific contracts which consists of the investment vehicle structure, fees, and assets. It is implemented as a token-as-a-currency instrument and receives distributions from the corresponding fund’s capital appreciation. Each contract connects and interacts with the platform via the asset interface.

Use Cases

Blockchain creates possibilities for a shared, protected data solution for wealth management firms and their clients. From basic information to risk profiles and historical returns, the platform can help financial professionals create a seamless transition for clients. The platform would also facilitate faster client on-boarding and provider switching and thus reduce client loyalty and barriers to change wealth management service providers. It provides the ability to gather clients’ and prospects’ data about their personal finances. When clients update their life circumstances, the blockchain stores all relevant data. New machine-learning technologies have the capability to send to the clients the content relevant to their situations. The client’s input is irreversible and the block chain helps the manager to track clients’ life changes and adjust their financial plans. Managers can use this client-generated evidence to protect themselves against client disputes. For example, when a client updates their profile to include a new baby, this action triggers a campaign setting up a college savings plan. The digital platform will send relevant content from leading providers in the college savings space to educate the client. Blockchain will help in providing better customer experience to the consumer world from wealth managers.

Real-time settlement models transform the execution of financial transactions with positive impacts on transaction costs, counter-party risk and capital availability. Blockchain threatens transaction fees as one of the main sources of income in traditional Wealth Management. Superannuation administrators can track financial movements, record assets, record member details, settle accounts through a single platform of distributed ledgers. Digitization, tokenization, accountability, and regulation are essential aspects of asset management which are maximized by the blockchain.

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